1. Technical Field
The invention relates to electronic commerce. More particularly, the invention relates to a method and apparatus for executing electronic commercial transactions with minors.
2. Description of the Prior Art
Electronic commerce is one of the most important aspects of the Internet. It allows people to exchange goods and services immediately and with no barriers of time or distance. Any time of the day or night, one can go online and buy almost anything one wants.
The demographics of the Internet have changed gradually over the past couple of years. As the total number of net users grows, their demographic profile becomes more similar to that of the average American. Core demographics--such as age, gender and income--are beginning to stabilize, more closely mirroring the population at large.
eStats estimates that 65% of current net users have used the Web to "shop around" online. Shopping as used herein is defined as checking out products and services and comparing prices, prior to a purchase decision. However, only 14% of net users have actually purchased anything online. Fewer still have used their credit card. This is expected to change drastically in the future.
Marketers sold about $9.5 billion worth of consumer goods over the net last year (1998), and it is projected that that figure will more than double to over $20 billion by the end of this year (1999).
While adults are able to complete commercial transactions over the Internet, minors, e.g. teens, are not able to enter into the binding contracts which form the basis of E-commerce. This is a significant factor in the growth and success of E-commerce because this year, teen spending for ages 12 to 19 will increase 16% to an estimated $141 billion, according to Teenage Research Unlimited Inc. Of that amount, $94 billion is their own money and $47 billion belongs to their parents. Teens get money from other sources as well, such as grandparents, odd jobs, and gifts.
Not only do teens have more money and greater influence over household purchases, but there are more of them. Last year, there were approximately 36 million teenagers, with the number projected to increase to nearly 40 million by 2005, according to the 1990 U.S. Census. If the parameters are broadened slightly, the estimate for the 10-to-24-year-old population group increases from 56 million this year to nearly 62 million in 2005.
Table A below shows teen income by age group.
TABLE A Teen Income By Age Group AGE INCOME 12-15 $32 16-17 95 18-19 151 Source: Teenage Research Unlimited
Table B below shows where teens get their money.
TABLE B Where Teens Get Their Money As needed from parents 55%(*) Odd jobs 47 Gifts 44 Part-time job 30 Allowance 28 Full-time job 12 Own business 2 Other 17 (*)Respondents were allowed more than one answer. Source: Teenage Research Unlimited Inc.
Table C below shows the share of teen spending by category.
TABLE C Share of Teen Spending By Category (1996) Clothing 34% Entertainment 21.7% Food 15.5% Other 10.7% Personal Care 8.5% Sporting Goods & Apparel 6.5% Reading Materials 3.4% Chart Courtesy react Magazine
Thus, while teens account for a significant portion of consumer purchases in several categories, they are literally shut out of E-commerce due to legal limitations on their ability to enter into binding contracts, as discussed above. In connection with teen purchases, it has been found that 22% of high school juniors have access to a credit card, 11% to a bank card, and 13.5% to a department store credit card. However, such access is to a parent's card. There are presently no such cards for teens in their own right. This lack of credit impedes the ability of teens to enter into transactions on the Internet, especially because all Internet commercial transaction involve credit of some sort. That is, it is not possible to use cash over the Internet and all commerce requires either a debit transaction (e.g. point-of-sale, i.e. ATM) or credit transaction (e.g. VISA or MasterCard). Yet, the Internet is well suited for teen shopping habits, e.g. clothing and entertainment products/services are readily available on the Internet.
Another issue affecting teen E-commerce involves the availability of literally anything on the Internet and the natural concerns of parents that their children not have access to immoral, dangerous, or otherwise objectionable products and services.
It would be advantageous to provide a method and apparatus for executing electronic transactions with teens, especially where such transactions could be limited only to those vendors or categories of vendors that have been approved by the teen's parents.